What If I DON'T Want to Be Paid by My LLC?

[Alfred Litton]

So, newbie question here. Hypothetical situation: I have an LLC that owns 3 sfh properties, and the NOI for the year is $20,000. Do I HAVE to pay the taxes on that $20,000 if I choose to keep it in the LLC and, for example, reinvest it in the purchase of another property? I don't need the income at present. I'd rather "let the profits ride" and keep adding to the LLC with my own income for now. Do I have to pull the NOI out, pay the tax, and then put it back in each year? Guidance appreciated on this one!

[Jon Holdman]

You don't have to pull the money out of the LLC, but you do have to pay taxes on it. An LLC is a pass through entity for taxes, unless you've elected to be taxed differently. So all the income that's under the LLC shows up on your personal tax return and you must pay the tax.